Key insights
- The article questions why Indian ETFs underperform relative to India's GDP growth compared to the US S&P 500's performance versus US GDP growth. It suggests potential headwinds for Indian equity investments despite positive macroeconomic indicators like decreasing debt-to-GDP and increasing net exports. The author seeks optimal strategies for broad Indian equity exposure, implying caution towards current investment vehicles.
The USA's S&P 500 has averaged 12.65% in the last 10 years, and the GDP has grown an annualized 2.5%.
The Indian GDP has averaged about 6% year over year., but the ETFs that track their biggest and best companies from a broad range of industries has only averaged 8.2%.
India's stock market should have about a 10% margin of performance better than their GDP like the USA, but instead, their stockmarkets are barely above their GDP for some reason. Their debt-to-GDP has been going down over the years, and moreover, their net exports will go up. Why is their markets not such a great investment? Also, what is the best way to invest in a broad array of Indian companies?